$185 million in industrial tax breaks approved under Landry’s new rules

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The Louisiana Board of Commerce and Industry approved $185 million worth of industrial tax breaks Wednesday under Gov. Jeff Landry’s new rules that take power away from local governments and no longer require companies to create jobs in exchange for the incentives.

In quick and common fashion, the board approved its latest round of Industrial Tax Exemption Program (ITEP) applications with little discussion and no opposition among the 20 or so members present.

Most of that $185 million applies to two projects over 10 years.

Taking the lion’s share at $127.6 million is ElementUS Minerals’ industrial waste recycling project. The company wants to transform waste at the Atlantic Alumina Co. refinery into critical minerals needed for the national defense sector, according to its filing with the Louisiana Economic Development (LED) agency.

ElementUS plans to build commercial scale facilities in St. John the Baptist Parish that will extract iron, alumina, scandium and other minerals and rare earth elements from about 30 million tons of an alumina refinery waste called bauxite residue.

The company is designing what it describes as a “zero-waste operation” whereby all the extracted elements can be sold, including the byproduct that results from the extraction process itself. That byproduct will be marketed to the construction sector as aggregate material that can be used to build high-strength roadways at low cost.

ElementUS is planning to first use its byproduct to build what it calls a “commercial demonstration road” at the Gramercy alumina refinery. The road will serve as a proof of concept for the Louisiana Department of Transportation and Development.

The total project will include 10 buildings, machinery, equipment and labor valued at an estimated $850 million. In exchange for that investment, St. John the Baptist Parish will forgo about $12.7 million in property tax revenue each year for the next five years. The company will then have the chance to renew the deal for an additional five years.

It’s unknown how many jobs the project might create, if any. As laid out in Landry’s executive order on the Industrial tax exemption program, LED no longer includes estimated job creation or estimated payroll totals.

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Board of Commerce and Industry chairman Jerald Jones briefly addressed the protocol changes at Wednesday’s meeting, speaking in favor of Landry’s order. He said ITEP was never intended as a job-creation incentive but was instead designed to “put assets in the ground” and help expand the local property tax base.

The other project proposal came from a Texas business looking to bring clean energy manufacturing to Louisiana. The owners of the proposed Cajun Crescent Complex received approval for three tax exemptions totaling roughly $42 million over 10 years.

The project will be a gigantic solar-powered manufacturing complex in the Lake Charles area shared by three affiliated companies based out of Texas. The planned developments will collectively span over 2,600 acres of land across two parishes.

The complex will include multiple rows of solar panels, transformers and transmission lines that will connect to an Entergy Louisiana substation. In all, it will be able to generate up to 375 megawatts of electricity — enough to power roughly a quarter-million average-sized homes.

The first exemption is for Crescent Coast Energy, located on the Calcasieu Parish side of the complex. Its development will be the largest of the three with a planned investment of about $327 million worth of buildings, materials, labor and machinery. In exchange, the company wants Calcasieu Parish to forgo over $4.1 million in property tax revenue per year for a total $42 million over 10 years.

The other two exemptions are for Cajun Crossroads Energy, which plans to invest $57 million for each of its two proposed developments. In exchange for its investment, the company wants Calcasieu Parish to forgo roughly $726,000 per year and Jefferson Davis Parish to relinquish $617,000 per year for 10-year totals of $7.2 million and $6.1 million, respectively.

Property taxes are a primary source of revenue for local governments to pay for public schools, law enforcement, road maintenance and other community services. The decades-old ITEP program originally gave large manufacturers 100% exemptions on their property tax bill with no requirements that they create jobs or show some kind of benefit to the community.

The Board of Commerce and Industry, composed of unelected appointees, eventually began receiving steady criticism and pushback from advocates and local elected officials. The board often rubber stamped every application it received with little scrutiny or concern for the communities affected by the loss in tax revenue.

In 2016, then-Gov. John Bel Edwards issued executive orders to reform the program . He reduced the amount of the ITEP exemptions companies could receive to 80%, required the creation of jobs, and — most significantly — gave local governments the authority to decide whether to approve or deny applications for the tax breaks.

Landry pulled back all of Edwards’ changes but the 80% rule when he entered office this year. Local taxing authorities such as school boards and parish councils no longer review each ITEP request on their own. Instead, a single amalgamated panel of local officials considers the applications, though the Board of Commerce and the governor retain the final decision-making power.

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